Insurance giant QBE is increasing the amount of money it puts aside for natural disasters as 2017 shapes as the most costly year for the global insurance sector.
QBE says it is increasing its 2017 large individual risk and catastrophe claims allowance to $US1.75 billion following hurricanes Harvey, Irma and Maria in the Gulf of Mexico, the Caribbean and parts of the US, and Mexico’s earthquakes.
“Given catastrophe losses to date, 2017 will likely prove to be the costliest year in the history of the global insurance industry,” the company said in a statement.
Damage costs from cyclone Debbie in Australia, combined with the latest natural disasters overseasm have all impacted on QBE’s businesses, the company said.
Despite the uncertainty around the cost of the hurricanes and earthquakes, QBE said it had increased its claims allowance which would mean a pre-tax hit to earnings of about $US600 million.
Chief executive John Neal said the catastrophic events over the past month alone had caused substantial and widespread property and infrastructure damage.
“While it is too early to speculate how much reinsurance and primary insurance pricing will rise as a result of the recent catastrophe experience, QBE is well placed to benefit from price rises with much of our reinsurance programs already purchased for 2018,” he said.
The total net cost of large individual risk and catastrophe claims was $US1.056 billion in 2015/16, and $US1.067 billion in the year before that.
Shares in QBE dropped 36 cents, or 3.5 per cent, to a 10 month low of $9.82.